Tether Says Its USDT Stablecoin May Not Be Backed By Fiat Alone

Tether has updated the terms on its website, saying that its dollar-pegged USDT stablecoin may not be backed 100 percent by fiat reserves.

The new text states that while its stablecoin is 100 percent backed, its reserves may at times include other assets.

The website reads:

Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”).

However, Tether’s previous terms, as seen on the Internet Archive in mid-February, indicated full fiat backing:

“Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.”

Tether has been at the center of questions over whether the firm has sufficient reserves to back its 1.9 billion USDT in circulation, although one report suggested it did, at least during specific time windows.

Last December, Bloomberg News reported that it has seen Tether bank statements indicating that, over four separate months at least, the company held sufficient dollars to back the USDT tokens on the market.

Much of the controversy around the firm arises from the fact that Tether has never provided a full independent audit of its dollar collateral. However, in November it released a letter from Bahamas-based Deltec Bank as proof of reserves.

Tether and its sister firm, crypto exchange Bitfinex, were reportedly subpoenaed by the U.S. Commodity Futures Trading Commission in December 2017 although it was not stated why at the time. The two companies have also also been accused by researchers of manipulating the price of bitcoin using USDT.